Top talent is running for the exits at the troubled TV networks amid a new culture of uncertainty and fear.
Note to Viacom employees: that sound coming from the cubicles and corner suites of Paramount Pictures, MTV and other sister companies likely is a colleague printing out a résumé. As the boardroom drama over Sumner Redstone’s succession plan drags on with little sign of resolution, the Redstone companies are experiencing an executive exodus, low morale and mounting questions about the future of the assets.
In the past few months, the $16 billion media giant has seen the exit of several key players — mostly on the television side — amid speculation that more could be on the way. On June 7, Nickelodeon lost Russell Hicks, president of content development and production and an 18-year company veteran. He follows the recent departure of Marjorie Cohn, Nickelodeon’s president of content development, who left for DreamWorks Animation, and animation chief Brown Johnson, overseer of the lucrative Dora the Explorer franchise.
At MTV, recent executive losses include reality chief Lauren Dolgen, network president Stephen Friedman, programming chief Susanne Daniels and, before that, MTV Networks Music & Logo Group president Van Toffler. At VH1, president Tom Calderone jumped ship along with programming chief Susan Levison. Larry Jones left his job as president of TV Land, and in May, Kent Alterman replaced Michele Ganeless as Comedy Central president after her 12-year run. Several reports say ad sales boss Jeff Lucas is in the process of ditching Viacom for Snapchat. (Viacom won’t confirm.)
The talent drain comes as Viacom’s frail chairman emeritus Redstone, 93, and daughter Shari Redstone, 62, battle in court and in the media with chairman Philippe Dauman, 62, and his allies. Dauman, who is suing with fellow board member George Abrams to be reinstated as directors on Redstone’s National Amusements board and as trustees of the trust that will control Redstone’s assets, has pursued plans to sell a 49 percent stake in Paramount as early as this summer. In response, on June 6, National Amusements amended its bylaws to require majority approval by Viacom’s board for any deal related to Paramount, effectively blocking a sale. When news of the move hit the email inboxes of Paramount employees that day, a loud and sarcastic “Ha!” and several groans were heard in the hallway of one studio division, says a source there. The corporate drama is the talk of the studio and networks. And experts say the boardroom turmoil definitely is taking a toll on the company.
“Board dynamics is important to retention of talent,” says Henry Stoever of the National Association of Corporate Directors. “You don’t want executives to say, ‘You know what? I don’t want to be associated with these people because their values aren’t aligned with mine.’ The culture of the boardroom sets the tone for the entire company, and all stakeholders are affected.”
Ten months ago, New England Patriots owner Robert Kraft stepped down after a decade as a Viacom board member, reportedly over the company’s “direction and governance.” The company’s stock price has plummeted 50 percent in two years, negatively impacting the retirement plans of many in a workforce of 10,500 people (although it seems to inch up when news indicates Dauman may leave the company). “People forget we are the victims of this whole charade,” says one Paramount employee who has been with the studio for a decade. Adds Mark Rogers of BoardProspects, a recruitment firm, “I’m willing to bet that the parties involved in the litigation aren’t considering the impact their actions are having upon the stock options of Viacom employees.”
Both Dauman and Cyma Zarghami, president of Viacom Kids and Family Group, have taken to sending mass emails to employees to assuage fears and implore them to ignore the “distraction” of the “unusual news about our company.” But many say the emails, juxtaposed with daily news reports that Redstone and his daughter want Dauman ousted from Viacom altogether (even if it means he’d depart with a golden parachute valued at $83 million or more) have prompted more ridicule than calm.
For the moment, the drama does not appear to be hurting Viacom’s standing among TV advertisers. Rather, it’s the portfolio’s ratings performance — many of the networks are down double digits year-over-year — that buyers naturally are concerned about. “It certainly doesn’t help,” says one buyer. “But it hasn’t really factored directly into any of our budget allocation decisions. Their general downtrend in ratings — and general relevancy — is a bigger drag on their ability to sell.” Another buyer notes Dauman, unlike his counterpart Leslie Moonves at Redstone’s CBS Corp., never has been “in front of the ad community in a meaningful way.”
Brad Hall, president of EntertainmentCareers.Net, says he hasn’t seen an uptick in Viacom employees seeking employment elsewhere, though he adds: “Big picture, when you have a stock price that has been cut in half, now rebounded, and the future leadership and ownership is in question, it is hard to keep the top talent motivated to stay.”
Still, Dauman seems to be trying. On June 9, he told analysts and investors that 40 players have expressed interest in Paramount and that taking on a strategic equity partner was crucial to accelerating growth at the struggling studio, where its latest franchise release, Teenage Mutant Ninja Turtles: Out of the Shadows, has underperformed. There haven’t been any high-level executive departures from Paramount this year, but agents tell THR that the uncertainty at the company is causing them to see it as a destination of last choice for film projects.
Meanwhile, rumors swirl that Redstone and Shari are seeking a way to oust perhaps not only Dauman but also Viacom’s entire board (save themselves), presumably including TV personality Deborah Norville and COO Thomas Dooley. If they don’t succeed, shareholders should sue, says BTIG analyst Rich Greenfield.
“The current Viacom board members outside of Sumner Redstone and Shari Redstone are likely to be terminated shortly anyway, but all they are doing now is making matters worse for Viacom by supporting a chairman and CEO who cannot prevent his own demise,” Greenfield wrote in a recent note. “Viacom’s board is delaying the inevitable and wasting company resources.” Adds Steven Birenberg of Northlake Capital Management, “People are still quite bearish on Viacom in the long term, and new management would be seen as being refreshing.”
A sampling of company employees reveals similar sentiments. “It is hard to charge off to work with conviction every day into a sea of question marks,” says Hall. “People can digest bad news easier than they can tolerate no news.”
Marisa Guthrie and Borys Kit contributed to this report.
This story first appeared in the June 24 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.